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Chapter E5: Benefit cap

Contents
What is the benefit cap
E5001:Introduction
E5003:Definitions
E5004:Couple
E5005:Reference period
E5006:Relevant amount
E5007:Single person
E5008:Welfare benefits
When the benefit cap applies
E5016:General
How to determine total entitlement to welfare benefits
E5017:Welfare benefit not awarded for a month
E5018:Amount of welfare benefits
E5021:Disregard
E5031:Reduction of universal credit
When the benefit cap does not apply
E5041:Pathfinder group
E5042:Receipt of certain benefits
E5043:Industrial injuries benefits
E5044:"Attendance allowance"
E4045:Meaning of war pension
E5051:Earnings
E5052:Grace period

Chapter E5: Benefit cap

What is the benefit cap

E5001 Introduction

This Chapter gives guidance on the BC. The BC is applied to welfare benefits to
which a
1. single person or
2. couple is entitled (1).

1 WR Act 12, s 96(1)

E5002

The BC applies
1. where a
1.1 single person has or
1.2 couple have
total entitlement to welfare benefits which exceeds the relevant amount during
the reference period and
2. to reduce the entitlement to welfare benefits where 1. applies by an amount
2.1 up to or
2.2 equalling
the excess during any period which is of the same length as the reference
period (1).
Note: In childcare cases the excess is minus the childcare costs element (2) (see E5031).
1 WR Act 12, s 96(2); 2 UC Regs, reg 81(1)(b)

E5003 Definitions

E5004 - E5008 give guidance on terms used for BC purposes.

E5004 Couple E5003

Couple means
1. joint claimants (1) or
2. a single claimant who is a member of a couple (2) and also the other member of
that couple (3).
References to a couple includes each member of that couple individually (4).
Note: See Chapter E2 for guidance on when a single claimant is a member of a
couple.
1 UC Regs, reg 78(2)(a); 2 WR Act 12, s 39; 3 UC Regs, reg 78(2)(b); 4 reg 78(2)

E5005 Reference period

The reference period is the assessment period for an award of UC (1).
Note: See Chapter E2 for guidance on the meaning of assessment period.
1 UC Regs, reg 79(2)

E5006 Relevant amount E5007 E5032

The relevant amount is
1. 2167 for
1.1
joint claimants or
1.2
a single claimant who is responsible for a child or qualifying young
1
person or
2. 1517 for a single claimant who is not responsible for a child or qualifying
2
young person .
Note 1: See Chapter F1 for the meaning of child and qualifying young person.
Note 2: Where a member of a couple makes a claim for UC as a single person (3) who
is not responsible for a child or qualifying young person, the relevant amount is that
at 2..
1 UC Regs, reg 79(3)(a); 2 reg 79(3)(b); 3 reg 3(3)

E5007 Single person

A single person is a person who is not a member of a couple (1).
Note: See E5006 for guidance on the relevant amount where a member of a couple
makes a claim for UC as a single person (2).
1 WR Act 12, s 96(10); 2 UC Regs, reg 3(3)

E5008 Welfare benefits E5003 E5020

Welfare
benefits (1) are
1. BA
2. CA
3. CHB (2)
4. ESA
5. GA (3)
6. JSA
7. MA
8. UC
9. WMA
10. WPA
11. WP
1 UC Regs, reg 79(4); 2 SS CB Act 92, s 141; 3 s 77

[E5009-E5015]

When the benefit cap applies

E5016 General

Unless E5041 et seq applies, the DM should apply the BC where the welfare
benefits to which a
1. single person or
2. couple
is entitled during the reference period exceed the relevant amount (1).
1 UC Regs, reg 79(1)
How to determine total entitlement to welfare benefits

E5017 Welfare benefit not awarded for a month

Where a welfare benefit is awarded in respect of a period that is not a month, the
monthly amount is calculated in the same way as for unearned income (1). Where this
calculation results in a fraction of a penny that fraction is
1. disregarded if it is less than 1/2p or
2. treated as a penny if it is 1/2p or more (2).
Note: See Chapter H5 for guidance on the calculation of the monthly amount of
unearned income.
1 UC Regs, reg 80(5); reg 73; 2 reg 6(1)

Example 1

Alison is entitled to WPA of 139.28 a week. The monthly amount is 603.55 (i.e.
139.28 x 52/12).

Example 2

Howard and Bernadette have 10 children. Bernadette receives CHB of 563.60
every four weeks, her entitlement being 140.90 a week. Their eldest child Chloe
leaves school in June 2014. However, CHB for Chloe remains in payment until the
terminal date. For the period spanning the terminal date, Bernadette receives CHB
of 536.80, her entitlement being two weeks of 140.90 and two weeks of 127.50.
Thereafter, Bernadette receives CHB of 510.00 every four weeks, her entitlement
being 127.50 a week. Howard and Bernadette's assessment period ends on 15th of
every month. For the assessment period ending 15.8.14, the monthly amount is
610.57 (i.e. 140.90 x 52/12) and for the assessment period ending 15.9.14 and
subsequent periods until any further change it is 552.50 (i.e. 127.50 x 52/12) (see
Chapter A4 for guidance on supersession where a relevant benefit, including CHB,
ceases or is reduced mid assessment period).

E5018 Amount of welfare benefits

Unless E5019 - E5021 apply, the amount of a welfare benefit used to determine
total entitlement to welfare benefits is the amount to which a
1. single person or
2. couple
is entitled during the reference period (1). Where the welfare benefit is taken into
account as unearned income for the purposes of an award of UC, the amount used
is the amount taken into account (2).

1 UC Regs, reg 80(1); 2 reg 80(4) & reg 66

E5019 E5018

Where
1. there is entitlement to a welfare benefit but
2. that welfare benefit is
2.1
not paid or
2.2 reduced
because of receipt of an overlapping benefit (1)
the amount of that welfare benefit used to determine total entitlement is the amount
in payment (2).
1 SS (OB) Regs; 2 UC Regs, reg 80(1)

Example

Cecilia is entitled to CA of 59.75 a week and BA of 55.23 a week. As CA and BA
are overlapping benefits, Cecilia receives BA in full (55.23 a week) and CA of 4.52
a week (i.e. 59.75 - 55.23). The DM decides that the monthly amount of CA used
to determine Cecilia's total entitlement to welfare benefits is 19.59 (i.e. 4.52 x
52/12). The monthly amount of BA is 239.33 (i.e. 55.23 x 52/12).

E5020

Application of the BC will reduce the level of entitlement to UC. Therefore, when
calculating total entitlement to all prescribed welfare benefits for the purposes of the
BC, DMs should use the level of entitlement before application of the BC. Where the
welfare benefit is UC, the amount (1) used is that before any reduction (2)
1. in accordance with E5031 et seq or
2. for a sanction (3).
Note: See E5008 for guidance on welfare benefits and Chapters K1 - K9 for
guidance on sanctions.
1 UC Regs, reg 80(2); 2 reg 81; 3 reg 80(2); WR Act 12, s 26 & 27

Example

Richard and Jacqueline claim UC. They have no children. Their UC entitlement is
2310.68. However, Jacqueline has a higher-level sanction due to ceasing paid work
by reason of misconduct. A reduction of 217.00 is imposed. As the amount of
2310.68 is higher than the relevant amount of 2167.00, the DM decides that the
BC applies. The DM also decides that the reduction of 217.00 for Jacqueline's
sanction is deducted from the relevant amount of 2167.00 so that Richard and
Jacqueline receive UC of 1950.00.

E5021 Disregard E5018

ESA is disregarded as a welfare benefit (1) when a person is disqualified (2) from
receiving it because they
1. have LCW due to their own misconduct or
2. fail without good cause to follow medical advice or
3. fail without good cause to observe the rules of behaviour.
1 UC Regs, reg 80(3); 2 WR Act 07, s 18

[E5022-E5030]

E5031 Reduction of universal credit E5002 E5020 E5032 E5032

Where the BC applies to an assessment period for an award of UC, the amount of
the award is reduced
1. by the excess (1) or
2. unless E5033 applies, by the excess minus any amount included in the award
for the childcare costs element in relation to that assessment period (2).
Note: See Chapter F7 for guidance on childcare costs element.

1 UC Regs, reg 81(1)(a); 2 reg 81(1)(b)

E5032

For the purposes of E5031, the excess is the total amount of welfare benefits that the
1. single person is or
2. couple are
entitled to in the reference period, minus the relevant amount (1) (see E5006).
1 UC Regs, reg 81(3)

Example 1

Raj claims UC. He is single and is not responsible for a child or qualifying young
person. Raj's UC amount is 1632.56. This exceeds the relevant amount of
1517.00. The DM reduces Raj's UC amount by 115.56, the amount of the excess.

Example 2

Kevin and Tanya claim UC. They have four children but do not have childcare costs.
Their UC amount is 1421.12. Tanya is pregnant and receives MA of 136.78 a
week. She also receives CHB of 242.00 every four weeks, her entitlement being
60.50 a week. Kevin and Tanya's total welfare benefits are 2276.00 (i.e. UC of
1421.12, CHB of 262.17 (60.50 x 52/12) and MA of 592.71 (136.78 x 52/12)).
This exceeds the relevant amount of 2167.00. The DM reduces Kevin and Tanya's
UC by 109.00, the amount of the excess.

Example 3

Ivan and Bridget claim UC. They have four children and have joint monthly earnings
of 390.00 with childcare costs of 350.00 a month. Their UC amount is 2710.86.
Bridget also receives CHB of 242.00 every four weeks, her entitlement being
60.50 a week. Ivan and Bridget's total welfare benefits are 2973.03 (i.e. UC of
2710.86 and CHB of 262.17 (60.50 x 52/12)). This exceeds the relevant amount
of 2167.00. The DM reduces Ivan and Bridget's UC by 561.03 (i.e. the amount of
the excess (806.03) minus the childcare costs element, which is 70% of their costs
(245.00)).

E5033

-

E5031

2. does not apply where the childcare costs element is greater than the
1
excess .
Note: See Chapter F7 for guidance on childcare costs element which is also subject
to a cap so the amount may not be 70% of the costs.
1 UC Regs, reg 81(2)

Example

Leonard and Penny claim UC. They have two children and have joint monthly
earnings of 425.50 with childcare costs of 400.00 a month. Their UC amount is
2163.45. Penny also receives CHB of 134.80 every four weeks, her entitlement
being 33.70 a week. Leonard and Penny's total welfare benefits are 2309.48 (i.e.
UC of 2163.45 and CHB of 146.03 (33.70 x 52/12). This exceeds the relevant
amount of 2167.00. However, the amount of childcare costs element, which is 70%
of their costs (280.00) exceeds the excess (142.48). Therefore, the DM does not
reduce Leonard and Penny's UC.

[E5034-E5040]

When the benefit cap does not apply

E5041 Pathfinder Group E5016

The BC did not apply to people in the Pathfinder Group before 28.10.131.
Note: See Chapter M2 for guidance.
1 UC (TP) Regs, reg 20

E5042 Receipt of certain benefits E5044 E5045

The BC does not apply where
1. the LCWRA element is included in the award of UC (1) or
2. a claimant is receiving
2.1 ESA which includes the support component (2) or
2.2 industrial injuries benefit (3) (see E5043) or
2.3 "AA"4 (see E5044) or
2.4 a war pension (5) (see E5045) or
2.5 a payment under specified legislation (6) or
3. a claimant, or a child or qualifying young person for whom a claimant is
responsible, is receiving DLA (7) or
4. a claimant, or a qualifying young person for whom a claimant is responsible, is
receiving PIP (8) or
5. a claimant, or a child or qualifying young person for whom a claimant is
responsible, is entitled to a payment at 2.2 - 4. but it is not being received
because of (9)
5.1 hospitalisation (10) or
5.2 residence in
5.2.a
a care home (11) or
5.2.b
an institution (12).
1 UC Regs, reg 83(1)(a); 2 reg 83(1)(a); 3 reg 83(1)(b); 4 reg 83(1)(c); 5 reg 83(1)(d); 6 reg 83(1)(e);
Armed Forces and Reserve Forces (Compensation Scheme) Order 2011 art 15(1)(c) or 29(1)(a);
7 UC Regs, reg 83(1)(f); 8 reg 83(1)(g); 9 reg 83(1)(h); 10 SS (AA) Regs, reg 6;
Naval, Military and Air Forces etc (Disablement and Death) Pensions Order 2006, art 53;
SS (DLA) Regs, reg 8; WR Act 12, s 86; 11 SS (AA) Regs, reg 7; SS (DLA) Regs, reg 9; WR Act 42, s 85;
12 Naval, Military and Air Forces etc (Disablement and Death) Pensions Order 2006, art 53

Example

Peter and Jenny claim UC. They have three children but no childcare costs. Their
UC amount is 2365.03. Jenny also receives CHB of 188.40 every four weeks, her
entitlement being 47.10 a week. In addition, Peter receives IIDB of 32.32 a week.
Peter and Jenny's total welfare benefits exceed the relevant amount of 2167.
However, as Peter is receiving IIDB the DM decides that the BC does not apply.

E5043 Industrial injuries benefits E5042

IIBs (1) are
1. IIDB
2. REA
3. RA
4. IDB
1 UC Regs, reg 2(1); SS CB Act 92, Part 5

E5044 "Attendance allowance" E5042

For the purposes of E5042 2.3 "AA" means (1)
AA (2)
1. 2. CAA and ESDA which is paid with IIDB because disablement has been
assessed at 100%3
3. payments for attendance under the Civilian's Personal Injury Scheme (4) or any
similar payment which are made to people who receive a disablement pension
because of war injuries suffered as civilians or civil defence volunteers
4. any payment for attendance which is a part of WDisP (including severe
disablement occupational allowance paid with CAA)
5. AFIP (5).
1 UC Regs, reg 2(1); 2 SS CB Act 92, s 64, 3 s 104 & s 105; 4 Personal Injuries (Civilians) Scheme 83,
art 14 - 16, 43 or 44; 5 Armed Forces and Reserve Forces (Compensation Scheme) Order 2011

E5045 Meaning of war pension E5042

For the purposes of E5042 2.4 a war pension is
1. any pension or allowance payable under specified legislation (1) to a widow,
widower or surviving civil partner or
2. a pension payable to a person as a widow, widower or surviving civil partner
under any power of Her Majesty except than under an enactment to make
provision about pensions for or in respect of persons who have
2.1 been disabled
or
2.2 died in consequences of service as members of the armed forces of
the Crown (2) or
3. a payment which is made to a widow, widower or surviving civil partner of a
person whose death was attributable to service in a capacity analogous to
service as a member of the armed forces of the Crown and whose service in
such capacity ended before 31.3.73 under
3.1 the Order in Council of 19.12.1881 or
3.2 the Royal Warrant of 27.10.1884 or
3.3 the Order by His Majesty of 14.1.223 or
4. a pension
4.1 paid by the government of a country outside the UK and
4.2 which is analogous to any of the
4.2.a
pensions or
4.2.b
allowances or
4.2.c
payments at
1. - 3.4. 1 UC Regs, reg 83(2)(a); Income Tax (Earnings and Pensions) Act 2003, s 639(2);
2 UC Regs, reg 83(2)(b); 3 reg 83(2)(c); 4 reg 83(2)(d)

[E5046-E5050]

E5051 Earnings

The BC does not apply to an award of UC in relation to an assessment period where
1. the
1.1 claimant's earned income or
1.2 couple's combined earned income (if the claimant is a member of a
couple) is equal to or exceeds 4301 or
2. the assessment period
2.1 falls within a grace period (see E5047) or
2.2 is an assessment period in which a grace period begins or ends (2).
Note 1: Earned income does not include any income a person is assumed to have
because of the minimum income floor (3) (see ADM Chapter H4).
Note
2: See ADM Chapter H3 for guidance on the calculation of earned income for
employed earners and ADM Chapter H4 for guidance on the calculation of earned
income for S/E earners.
Note 3: The amount of 430 can be met by a combination of employed and S/E
earnings.
1 UC Regs, reg 82(1)(a); 2 reg 82(1)(b); 3 reg 82(4) & reg 62

Example

Gill claims UC. She is single and is not responsible for a child or qualifying young
person. She is a S/E hairdresser. Gill's UC amount is 1591.23. She also has S/E
earnings of 477.66 in the assessment period. Gill's total welfare benefits exceed
the relevant amount of 1517.00. However, as Gill has earnings above 430.00 in
the assessment period, the DM decides that the BC does not apply.

E5052 Grace period E5053 E5053

A grace period is a period of 9 consecutive months which begins on the most recent of
1. a day falling within the current period of entitlement to UC which is the first day
of an assessment period in which
1.1 the claimant's earned income or
1.2 the couple's combined earned income (if the claimant is a member of a
couple)
is less than 430 or
2. a day falling before the current period of entitlement to UC which is the day
after a day on which the claimant has ceased paid work
in respect of which E5053 applies (1).

1 UC Regs, reg 82(2)

E5053 E5052

E5052 applies where, in each of the 12 months immediately preceding the day in E50521. or 2.
1. the claimant's earned income or
2. the couple's combined earned income (if the claimant was a member of a
couple)
was equal to or exceeded 4301.
1 UC Regs, reg 82(3)

Example 1

Cliff and Jean claim UC on 1.11.13 as Cliff finishes work on 31.10.13. On that day
Cliff received earnings of 3592.27. He had received that amount in each of the
preceding 12 months. They have no children and no other income. Cliff and Jean's
UC amount is 2461.43. This exceeds the relevant amount of 2167.00. However,
the DM decides that Cliff and Jean are eligible for a grace period which will run from
1.11.13 to 31.7.14 and that the BC does not apply until 1.8.14.

Example 2

Sheldon and Amy receive UC of 2463. Their AP ends on 12th of each month. They
have two children but no childcare costs. In addition to UC, Amy receives CHB of
134.80 every four weeks, her entitlement being 33.70 a week. Sheldon also has
earnings of 530.86, which he had received for more than 12 months. The BC did
not apply. Sheldon's hours reduce and on 31.3.14 he receives 423.62. The DM
decides that Sheldon and Amy are eligible for a grace period which will run from
13.3.14 to 12.12.14 and that the BC does not apply until (13).12.14.

Example 3

Tony finishes work on 31.3.14 and claims UC on 1.4.14. His UC amount is
1710.39. This exceeds the relevant amount of 1517.00. On the day he finished
work Tony received earnings of 460.25. However, he only received that amount for
6 months. Before that 6 month period Tony's earnings were less than 430.00. The
DM decides that Tony is not eligible for a grace period and applies the BC.

Example 4

Matthew and Mary claim UC on 31.5.14 as Matthew finishes work on 30.5.14. On
that day Matthew received earnings of 2645.39. He had received more than that
amount in each of the preceding 12 months. They have no children. However, Mary
has earnings of 403.98. Matthew and Mary's UC amount is 2196.06. This exceeds
the relevant amount of 2167.00. However, although Mary's earnings are less than
430.00, the DM decides that Matthew and Mary are eligible for a grace period
because of Matthew's previous earnings. The grace period will run from 31.5.14 to
27.2.15 and the BC does not apply until 28.2.15.

[E5054-E5999]